Stowers v. Ga. Pac.
| Decision Date | 29 March 2022 |
| Docket Number | 0333-21-3 |
| Parties | COREY M. STOWERS v. GEORGIA PACIFIC, LLC AND OLD REPUBLIC INSURANCE COMPANY OF NORTH AMERICA |
| Court | Virginia Court of Appeals |
FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION
Joseph A. Sanzone (Sanzone & Baker, L.L.P., on brief), for appellant.
Andrew H.D. Wilson (Two Rivers Law Group, P.C., on brief), for appellees.
Present: Judges Humphreys, Ortiz and Chaney Argued at Lexington, Virginia
Corey Stowers ("Stowers") appeals the decision of the Virginia Workers' Compensation Commission ("the Commission") granting the appellees, Georgia Pacific LLC and Old Republic Insurance Company of North America (collectively, "the employer"), a credit against the employer's future liabilities for Stowers' compensation payments and medical expenses based on Stowers' settlement of a federal civil action against a third party. Stowers filed a product liability claim against a third-party safety equipment manufacturer seeking damages for his at-work injuries, including, inter alia pain and suffering damages, which are not covered by the benefits under the Virginia Workers' Compensation Act ("the Act"). In his single assignment of error, Stowers contends that the Commission erred in interpreting Code § 65.2-309 in deciding that "non-compensable damage recoveries" from the third-party settlement are subject to the employer's statutory right to subrogation.[1] For the following reasons, we affirm the Commission's decision.
The essential facts are not in dispute. In March 2015, Stowers suffered serious injuries in a work-related accident at the employer's industrial plant in Gladys, Virginia. While Stowers was performing routine maintenance on an enormous machine that was turned off, the conveyor system started unexpectedly. A safety-lock hasp used to prevent the inadvertent starting of the equipment failed to remain rigid, causing the equipment to turn on.[2] The engagement of the equipment set in motion a flying chain that repeatedly struck Stowers. Stowers suffered a fractured skull, broken bones, and other severe injuries.
The employer agreed to pay workers' compensation benefits to Stowers, whose average weekly wage was $1, 865.60 at the time of the industrial accident. The parties signed an award agreement in October 2015. The Commission entered an aw a rd order in November 2015 approving the parties' agreement for the payment of compensation under the Act. The award included weekly payments in the amount of $967 during temporary total disability and lifetime medical benefits "for reasonable, necessary and authorized medical treatment" for Stowers' workplace injuries, specifically his "basilar skull fracture, left forearm/wrist fractures/lacerations, frozen left shoulder and post-concussive syndrome."
After Stowers returned to work in January 2016, the Commission entered additional award orders for permanent partial disability and various temporary partial disability awards. On October 30, 2017, by agreement of the parties, the Commission entered a stipulated order awarding Stowers compensation for various periods of temporary partial disability with continuing temporary partial disability to be determined quarterly based on Stowers' earnings at light duty. The stipulated order stated that Stowers earned above his pre-injury average weekly wage beginning March 6, 2017.
In June 2017, Stowers filed a complaint against the third-party manufacturer of the defective hasp in the United States District Court for the Western District of Virginia.[3] Stowers sought $10, 000, 000 (ten million dollars) in compensatory damages for his at-work injuries including, inter alia, damages for his suffering of "great pain of body and mind."
In November 2017, the employer filed a notice of lien and petition of lien in Stowers' third-party civil action, pursuant to Code § 65.2-310. The employer's petition asked the trial court to (i) ascertain the exact amount of its statutory lien, i.e., the amount of the employer's compensation payments and expenses under the provisions of the Act, and (ii) order payment of the statutory subrogation amount to the employer from the proceeds of any judgment or compromise settlement.
Stowers settled his third-party product liability suit for $550, 000 (five hundred fifty thousand dollars) on the eve of trial in April 2018. Neither party negotiated with the employer to compromise its lien in order to facilitate the third-party settlement. The federal trial court dismissed the case with prejudice pursuant to the parties' agreement and stipulation.
After Stowers resolved his federal third-party suit by settlement, the employer sought payment from Stowers' counsel of the employer's total workers' compensation lien to date. Stowers' counsel paid the employer $241, 215.83, comprising $186, 671.07 for payments made f o r wage-based claims and $54, 544.76 for medical expenses. The parties agreed that these payments satisfied the employer's lien to date as of October 2018.
In November 2020, the employer moved the Commission for entry of a third-party order. The employer's motion stated that Stowers h a d settled a claim against a third-party for $550, 000 for injuries from his occupational accident. The motion stated that the employer's statutory lien at the time of the third-party recovery was $241, 215.83 and had been satisfied to date. Employer requested that the third-party order provide a 37.859% cost recovery ratio for future compensation based on the third-party settlement amount and the amount of Stowers' attorney fees and costs for the third-party litigation. The employer stated that the parties agreed that reimbursement to Stowers arising from indemnity benefits shall be paid directly to Stowers on a weekly basis and that reimbursement of any medical entitlements shall be paid directly to the medical provider.
A third-party order entered by the Commission on November 23, 2020, was superseded by an amended third-party order entered on December 1, 2020, which included corrected information about the total amount of third-party settlement attorney fees and costs.[4] The amended third-party order recognized that a third-party recovery in the amount of $550, 000 had been received on Stowers' claim. The order stated that the employer had received $241, 215.83 in satisfaction of the employer's lien amount to date. Pursuant to Code § 65.2-313, the Commission ordered that the employer is entitled to a credit of $308, 784.17 against its liability for additional compensation payments and medical expenses, after which its responsibility to make such payments shall resume. The order stated that the employer is responsible for a pro rata of expenses and attorney fees, as required by Code § 65.2-311. The order provided that Stowers remains entitled to a reimbursement of attorney fees and expenses at the rate of 37.859% of any additional compensation and/or medical entitlements as they are incurred, to be paid by employer directly to Stowers on a quarterly basis from the date of the order. In addition, the order required Stowers to provide the employer with medical bills when a pro rata reimbursement is sought.
Stowers subsequently filed a request f or review of the December 1, 2020 amended third-party order. Stowers contended that the Commission erred in (i) granting the employer a credit and reimbursement in the amount of $308, 784.17 against its future liabilities and (ii) ruling that employer is entitled to a lien recovery against that portion of the personal injury recovery which related to pain and suffering and other non-compensable damages. The Commission reviewed the case only on the record with no written statements.
The Commission affirmed the December 1, 2020 amended third-party order by an opinion dated March 4, 2021. The Commission "den[ied] the claimant's request to reduce the corpus of the third-party recovery subject to subrogation." Citing Liberty Mutual Ins. Co. v. Fisher, 263 Va. 78, 81 (2002), Eghbal v. Boston Coach Corp., 2 3 Va.App. 634, 638 (1996), Emberton v. White Supply & Glass Co., 43 Va.App. 452, 457 (2004), and Code §§ 65.2-309 through 65.2-313, the Commission ruled that "the Act and these precedents do not allow any deduction from the gross recovery for any non-compensable damages recovered." The Commission concluded that the credit to employer was accurately calculated: "[t]he gross recovery of $550, 000.00 less the [employer's] statutory lien at the time of the settlement, $241, 215.83, equals the awarded credit of $308, 784.17."
The Commission also concluded that the am ended third-party order included the correct cost recovery ratio, which is set by Code § 65.2-313. The Commission explained that Accordingly, the Commission affirmed the amended third-party order.
Stowers' appeal to this Court followed.
On appellate review of a decision by the Commission, this Court "construe[s] the Workers' Compensation Act liberally for the benefit of employees to effectuate its remedial purpose of making injured workers whole." Intercept Youth Servs., Inc. v. Est. of Lopez, 71 Va.App. 760, 767 (2020) (quoting Advance Auto & Indem. Ins. Co. of N Am. v. Craft, 63 Va.App. 502, 514 (2014)). "The [C]omission's construction of the Act is entitled to great weight on appeal." Ceres Marine Terminals v. Armstrong, 5 9 V a . App. 694, 702 (2012) (quoting Fairfax Cnty. Sch. Bd. v. Humphrey, 4 1 Va.App. 147, 155 ...
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